October 1 starts a new Medicare payment year for skilled nursing facilities. For the business office, that means new SNF PPS rates, a new wage index, a new Value-Based Purchasing adjustment and updated billing-system tables must all be ready before the first October claim goes out.
CMS finalized a 2.4% increase to FY 2027 SNF PPS rates, which it estimates will add $882.74 million in aggregate Medicare Part A payments. That does not mean every facility will receive a 2.4% increase. Your actual change depends on your wage index, patient mix, Quality Reporting Program status and Value-Based Purchasing incentive payment multiplier.
Use this checklist to work through the changes that affect claims for dates of service beginning October 1, 2026. It also identifies future requirements included in the FY 2027 final rule that business offices should track but do not need to implement on October 1.
1. Load and test the FY 2027 SNF PPS rates
Do not assume your billing software updated correctly. Confirm that your vendor loaded the FY 2027 urban or rural federal base rates and the correct PDPM component rates before billing October dates of service.
CMS based the 2.4% update on a 3.3% market basket increase reduced by a 0.9 percentage-point productivity adjustment. The increase applies nationally, but it is only the starting point for each facility’s payment calculation.
October 1 action list
- Confirm the effective date is October 1, 2026, and that September dates of service still calculate under FY 2026 rates.
- Verify the PT, OT, SLP, nursing, non-therapy ancillary and non-case-mix component rates.
- Test at least three HIPPS codes, including a common clinical category, a high NTA case and a stay that crosses September 30.
- Compare the test claims with your own calculation or the CMS rate files. Do not rely only on the amount shown in the software.
- Confirm the variable per diem adjustment starts on the correct day and follows the resident’s Medicare stay dates.
Our FY 2027 SNF PPS final rule article explains the payment and reporting changes in more detail. The PDPM guide reviews the six payment components and the variable per diem schedule.
2. Verify the FY 2027 wage index
The wage index can increase or reduce the effect of the national rate update. Pull your facility’s FY 2027 wage index from the CMS file and compare it with FY 2026. CMS continues to apply a permanent 5% cap on year-to-year wage index decreases, but the downloadable wage index table itself is not capped. The Medicare Pricer applies the cap when required.
October 1 action list
- Confirm the facility’s county and Core-Based Statistical Area classification.
- Record the uncapped FY 2027 wage index from the CMS file.
- Determine whether the 5% decrease cap applies to the facility.
- Confirm the billing system or rate calculator uses the wage index the Medicare Pricer will apply.
- Estimate the facility-specific payment impact instead of quoting the national 2.4% increase as the expected increase.
3. Review the FY 2027 VBP multiplier before October billing
The FY 2027 SNF Value-Based Purchasing Program expands from four measures to eight. CMS released facility Performance Score Reports in iQIES in August 2026. The report includes the incentive payment multiplier CMS will apply to Medicare fee-for-service Part A claims paid from October 1, 2026, through September 30, 2027.
The eight measures cover readmissions, healthcare-associated infections, discharge to community, long-stay hospitalizations, nursing staff turnover, nursing staff hours, discharge function and falls with major injury. The business office does not calculate the score, but it should know the multiplier and incorporate it into payment expectations.
October 1 action list
- Download and retain the FY 2027 Performance Score Report from iQIES.
- Record the facility’s incentive payment multiplier in the Medicare rate worksheet.
- Share the report with the administrator, clinical leadership, MDS and finance.
- Update the Medicare revenue forecast and contractual allowance assumptions.
- After the first October remittance, verify that Medicare applied the expected multiplier.
4. Update the Medicare rate worksheet and budget assumptions
A rate increase on paper does not guarantee the same increase in cash. Build the facility-specific rate using the FY 2027 base rates, wage index, PDPM case mix and VBP multiplier. Then compare the result with the rates used in the budget.
If the budget uses a single average Medicare rate, recalculate it using the facility’s actual HIPPS distribution. A change in payer mix, length of stay or clinical categories can move the blended rate more than the annual update itself.
October 1 action list
- Update the facility’s Medicare rate calculator and reimbursement worksheet.
- Recalculate the expected rate for the most frequently billed HIPPS codes.
- Review the effect on Medicare Advantage contracts that base payment on Medicare rates.
- Update revenue and cash projections with the facility-specific change.
- Give the billing team a clear variance threshold for investigating underpayments.
5. Prepare for claims that cross September 30
A Medicare stay that continues into October must reflect the correct rate for each date of service. The billing team should not treat September and October as if they fall under one payment year.
October 1 action list
- Identify every open Medicare Part A stay expected to cross September 30.
- Confirm the billing system applies FY 2026 rates through September 30 and FY 2027 rates beginning October 1.
- Review interrupted stays, benefit-day counts, coinsurance days and variable per diem day counts before final billing.
- Run the October triple check with both fiscal-year rate sets available.
- Validate the first remittance against the claim, HIPPS code, wage index and VBP multiplier.
Our triple check article explains how to add these reviews to the facility’s regular month-end process.
6. Know what did not change on October 1
The final rule did not make substantive changes to the PDPM ICD-10 code mappings. Facilities still need to use the ICD-10 code set in effect for the date of service and confirm that software updates loaded correctly, but the FY 2027 rule does not require a broad PDPM mapping change.
The rule also finalized several QRP changes that do not all begin on October 1, 2026. CMS removed two COVID-19 vaccination measures beginning with the FY 2028 SNF QRP. CMS will not penalize facilities under the FY 2028 annual payment update if they do not report calendar year 2026 healthcare personnel COVID-19 vaccination data. Facilities must still follow any separate infection-control or reporting requirements that apply.
CMS shortened the QRP data submission deadline from 4.5 months after quarter-end to the 15th day of the second month after quarter-end, beginning with the FY 2029 SNF QRP. CMS also finalized all-payer MDS submission for residents receiving covered skilled care beginning with the FY 2031 SNF QRP. These are planning items, not October 1, 2026 billing changes.
7. Complete a controlled October billing test
The best final check is a full claim test before the billing team submits October claims. Select several residents with different HIPPS codes and manually calculate the expected payment. Include at least one claim that crosses the fiscal year.
October 1 action list
- Confirm the correct fiscal-year rate by date of service.
- Confirm the HIPPS code matches the accepted MDS assessment.
- Verify the wage-adjusted components and variable per diem adjustment.
- Apply the facility’s FY 2027 VBP multiplier.
- Compare the expected amount with the billing system and the Medicare remittance.
- Document any variance, assign an owner and resolve the system issue before releasing the full claim batch.
Make sure your team is ready before October 1
The final rule gives facilities the policy. The business office must turn it into correct rates, clean claims and realistic payment expectations. By September 30, the team should know which rate tables changed, what wage index applies, how VBP affects payment and how it will validate the first October remittance.
A short, documented test now can prevent a full month of underpayments, incorrect contractual adjustments and avoidable rework. Download the October 1 readiness checklist and review it with billing, MDS, finance and clinical leadership before your team submits the first FY 2027 claims.
